Definition of ERP

At the Microsoft Worldwide Partner conference, I asked several folks to participate in an informal one-question survey. The question was “What is an ERP system?”

At the Microsoft Worldwide Partner conference, I asked several folks to participate in an informal one-question survey. The question was “What is an ERP system?”

All of the Microsoft partners I spoke with were well versed in software and know their specific area of expertise. Many used acronyms such as LMS and RMS without thinking it was possible that I may not know what those things are. Likewise I assumed that everybody knew what ERP was, but in reality, even some technologists need a bit of guidance.

Many of the answers provided were quite good, and most people know that ERP stood for enterprise resource planning. A few notable exceptions include the person who thought that ERP and accounting were “pretty much the same” and the person who argued that ERP referred to “any business software system designed to simplify work.”

Formal Definition

Following the show, somebody who took the poll sent me the following definition:

“Enterprise resource planning (ERP) is an Integrated computer-based system used to manage internal and external resources including tangible assets, financial resources, materials, and human resources. It is a software architecture whose purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. Built on a centralized database and normally utilizing a common computing platform, ERP systems consolidate all business operations into a uniform and enterprise wide system environment.

An ERP system can either reside on a centralized server or be distributed across modular hardware and software units that provide “services” and communicate on a local area network. The distributed design allows a business to assemble modules from different vendors without the need for the placement of multiple copies of complex and expensive computer systems in areas which will not use their full capacity.”

The Cloud and ERP

The definition above used to be accurate, but the delivery aspects of ERP are changing. During the conference, Microsoft stressed cloud, cloud, and more cloud. The cloud makes it possible to deliver ERP in new ways, including the ability to deliver services outside the “local area network” described in the formal definition.

The cloud is changing and improving ERP. As many ERP companies are discovering, the cloud and web-based solutions allow you to build and deploy solutions in ways that meet customers’ needs so they no longer have to setup and rely on a complex local area network.